Jefferies analysts initiated coverage on American Water (NYSE:AWK) with an Underperform rating and set a price target of $124 on the stock. They expressed concerns over AWK’s current valuation premium of over 45% relative to electric utility peers, pointing to potential EPS growth deceleration due to increasing balance sheet pressures and an absence of growth tied to data centers. The analysts identified several challenges facing American Water, including difficulties in replacing approximately $80 million in interest income after 2026, the company’s reliance on mergers and acquisitions for growth, and rising regulatory risks, particularly following a recent regulatory setback in Pennsylvania.